Iceland is a truly unique country in many respects. Its northernmost edges flirt with the Arctic Circle in the North Atlantic, but it is far more mild than one would expect at such latitudes. It has a tiny population of about 300,000 people, two-thirds of whom live in the capital city, Reykjavik. It’s also blessed with clean, honestly renewable and sustainable energy sources: geothermal and hydro-electricity. Iceland ranked 5th of 146 countries in the 2005 Environmental Sustainability Index (1). It plans to be the first country to implement a hydrogen economy, taking advantage of its vast electric resources. However, sustainability is still wanting in this tiny, isolated island nation, despite its massive advantages over most countries. Iceland’s infrastructural fabric cannot, at this time, free itself from the world oil economy.

Icelanders drive gasoline-powered cars, and big ones at that. In May of 2006, gasoline prices in Reykjavik stood at close to $7 a gallon, and yet large SUV's are still a common sight on the roadways. Despite the nation’s high hopes for an emissions-free economy, it now stands as the largest greenhouse-polluter per capita in the world (2). However, Iceland is a very well run country, with almost non-existent unemployment, and a comprehensive welfare program, so people can afford to drive big cars, whilst paying some of the highest prices for gasoline of any population (3).

Because of its geology and latitude, Iceland is disadvantaged agriculturally. Its main food products are fish, mutton, potatoes, green vegetables and some dairy, hardly a well-balanced diet, and these industries can’t sustain the country’s population while maintaining economic stability. For example, fish make up 70% of the country's exports (4). Shifting the supply of fish more heavily to the domestic sector would crush Iceland's chief export industry. Also, with only 1% arable land, and a blink of a growing season, the potential for expansion in the agricultural sector is severely constrained (5). Iceland imports the rest of its food on gigantic oil-powered freight ships. A key component of a healthy, sustainable economy is a well-nourished population, and with a staggering reliance on food imports, in a world where the oil supply is on the verge of peaking forever, Iceland’s hopes for sustainability take a huge hit (6).

In the past 10 years, the rest of the world has discovered Iceland as a prime tourist destination, and the country has experienced astounding growth in this sector (7). Reykjavik, once a quiet, unassuming port city, is now a night-life hotspot. Iceland’s extraordinary volcanic landscape, along with geysers, craters, and waterfalls, has attracted more and more tourists every year, anxious to see these wonders for themselves. Icelandair and Iceland Express are two successful airlines based out of the capital city. The companies handle a great deal of the passenger traffic to and from the country, and they can’t effectively run without the large ground workforce at Keflavik international airport. Unfortunately, as the world oil supply peaks, jet fuel for the air fleet will be more and more costly. Traffic to and from Keflavik International Airport has tripled in the past 20 years, and the coming oil shock will paralyze this booming industry (8). This spells disaster, not only for the airlines, the airport, and the employees thereof, but also for Iceland’s tourist industry as a whole, which is massively reliant on cheap air-travel for its existence.

A few noteworthy wildcards play a role in Iceland’s future. One is global warming. Increased glacial melting, and decreased duration of snow pack could upset the flow of Iceland’s rivers, therefore hindering its constant hydroelectric output. The opposite argument is a massive cooling of Iceland’s climate, due to a stalled global conveyor belt, which is responsible for keeping Iceland as temperate as it is (9). The jury is out concerning Iceland's fate in the global climate lens, but either extreme will surely disrupt any plan for sustainability.

The next possibility is whether Iceland can successfully export geothermal and hydroelectric power to Europe via submarine cables, which has been hinted at for the past few years. If Iceland is successful in doing this, it would acquire so much financial and political capital that it could purchase oil for its ship imports at almost any cost, even if oil spikes to $100 or $200 a barrel. Another wildcard is the rate of both birth and immigration in Iceland. Although it's unlikely, the country may expand rapidly, straining its otherwise plentiful electric and heating resources, and possibly sending import prices through the roof. These scenarios are speculative at best, but are also important factors to consider when looking at Iceland’s collective future in a world on the brink of a new step in human civilization: sustainability.

Iceland has hurdles it must clear before it can achieve a renewable economy. Luckily, however, Iceland has a small population, a virtually unlimited supply of electricity and home-heating, and a homogenous population with similar goals for the country’s future. Political mobilization is quite possible in a nation with half the population of Boston.

Iceland has a few key exports, including fish, pharmaceuticals, and aluminum. Using these exports to its advantage, Iceland could hire a contractor to build hydrogen-powered ships, with the sole responsibility of picking up materials, bringing them to Iceland, and then conversely shipping Iceland’s exports offshore. The ships could refill at Reykjavik, taking advantage of Iceland’s relatively unlimited electricity. This innovation, despite being an engineering and technical feat, could secure Iceland’s food and textiles supply, without the enormous oil price tag to get the materials across the ocean. On the same page, Iceland’s tourist sector could try to recoup the losses of a dying airline industry with, what else, hydrogen-powered luxury cruise-lines to and from the US and Europe. The novelty of such ships might have more staying power than initially expected, once the world's prospective tourists deal with the reality of longer travel times (air travel will be reserved for the super-rich once again).

Barring the amazing achievement of super-sized hydrogen fuel-cell motors, with the strength to power trans-atlantic freight ships, a more practical way to overcome Iceland’s vulnerability to food imports is a massive greenhouse initiative. With non-stop daylight in the summer months, high-powered bulbs in the winter months, and a steady supply of fresh water throughout the year, Iceland could look to grow much of its food in a couple dozen massive greenhouses.

In the grand scheme of things, Iceland is leaps and bounds ahead of almost any other country in its quest for sustainability. Its social well being, free electricity and heating, and small population all provide great assets to the country as it moves its economy deeper into the 21st century. However, the critical notion is that, even as this country’s ambitious plan for sustainability takes off, Iceland itself is more than a hop, skip, and a jump from a secure future. Also, it’s an unfortunately solitary case of abundant geothermal energy; a rare resource which can’t sustain the global population in any significant capacity.

The first nation to become truly sustainable will signify a turning point in the existence of humankind. With a few serious commitments to securing its food supply, and covering other areas of its economy, like tourism, from utter collapse, Iceland can be the first nation to make the eternal transition to a sustainable future.

After traveling to Iceland this past spring, and evaluating it on many different levels, I found it to be an incredibly polarized country, as far as natural resources are concerned. On one hand you have inexhaustable water-heating and electricity resources, and on the other you have a complete reliance on food and oil imports. It's going to be very interesting to see how, and if, Iceland's proposed hydrogen economy will actually function.

Thank you for the criticism, David. I conflated what is a very complex issue, how the price of oil affects certain aspects of the world economy, into the single issue of shipping costs. And your sourced link compels me to change how I look at shipping costs in the big picture of a product's price.
However, I think you missed a key aspect of Iceland's established goal for the coming century; to integrate its abundant electric resources, through hydrogen, into the economy, in order to become SUSTAINABLE. Using a finite resource (e.g. oil) faster than it replenishes is not sustainable. If you have oil-powered ships transporting goods both to and from your country, and all of your cars and trucks run on gasoline, your economy isn't oil-free. If the economy isn't oil-free, then it isn't sustainable. Sustainability is the focus of my article. Iceland doesn't want to wait for demand destruction to incite economic transformation; it wants to voluntarily free itself of fossil fuels before the crisis hits. The Icelandic government now needs to figure out the best strategy to achieve its goal.